"-\,Iease of a manufacturing establishment, made by an insolvent debtor to Oneo! his creditors, as part of a fraudulent scheme to place his property ",!thin the exclusive of such creditor, and accepted by the latter with -knowledge of the lessor's insolvency, and with the intention of securing to himself an advantage over the other creditors, will be set asidE'. on petition of the lessor's trustee in bankruptcy, as fraudulent and preferential; .and the lessee will be required to account to- such trustee for the net profits of-the business conducted by him on the premises while _the same remained In his possession.

In Bankruptcy. On petitionof WalterOarter1 as trustee in bankl'uptCy of Beecher Goodykoontz 1 against the bankrupt and Zachal'lah T;· Hobbs1 to set aside certain mortgages and a lease of a brickmaking made by the'bankrupt to Hobbs1 as being preferential and fdtudrilent. For decision of the court overruling a demurrer to the petition, see 92 Fed. 594. Gardiner) Barrett & Brown and Gifford & Coleman1 for complain' " aIlt. _." '" '(iavin & Davis and Fippen & Purvis1 for defendants. BAKER1 District Judge. This is a suit by Carter1 trustee, against the defendants for the purpose of setting aside two mortgages and a lease of certain real estate, on the ground that the same are severall'y for the purpose of hindering, delaypl'eferentia!, and were ing, and defl'au{Jjng the creditors of the bankrupt, and of giving Hobbs a )arger than other creditors of the estate. On the 22d day of Augl,lSt, 1898, the bankrupt executed and delivered to HObbs a mortgage on certain real estate described in the complaint to secure date for thesulll. of $2,150, due in 30 days. On the a note of 14th day of November1 1898, the bankrupt executed and delivered to Hobbs a chattel.niortgage on certain personal property therein des<;ribed to se,Cjlre the payment of a note for $1,798.67, due one day after datE;. ' The lease or agreement under which Hobbs took poso;essionof the brick-manufacturing establishment and premises was made ao,<tut the 22d day of August1 1898; and, under and in pursuance of it, Hobbs entered into ,possession and used the same until the 25th day of December, defendant Hobbs answered the complaint, admitting that the two mortgages mentioned were invalid, as being'preferential in. their character, and ,that the same Wel'e void; fj.S · being ",itl;lin the inhibition. of the bankruptcy law; but be that the agreement under which he .took possession the premiSeS was preferential1 or taken by hiro for

IN RE FT. WAYNE ELECTRIC CORP.

109

the purpose of defrauding creditors or of obtaining any advantage over them. The three instruments that are assailed were executed by the bankrupt to Hobbs at about the same time, and are so nearly connected together that the court is of opinion that they were all executed with the same fraudulent purpose. Hobbs knew at and before the time that the instruments were executed, and at and befQre the time that he took possession of the leasehold property, that Goodykoontz was hopelessly insolvent. The court is of opinion that the instrument under which Hobbs took possession of the leasehold premises, and his possession of the same, were in fraud of the bankrupt law, and taken with the view and intent of obtaining an advantage over other creditors,.and that the possession of the leasehold property must be held to be fraudulent and void as against creditors, the same as the real estate and chattel mortgage.. The court is of opinion that the defendant Hobbs ought to be charwith profits and gains received by him from the use of the leasellold property in the sum of $2,277, and that he is entitled to a credit for expenses and disbursements made by him in the conduct of the brick business on the leasehold property in the sum of $1.944.65, and that he ought to pay to the trustee, the plaintiff in this case, the sum of $:332.35, as gains and profits received by him in fraud of the bankrupt law. An order will therefore be entered that the two mortgages mentioned in the complaint, as well as the agreement for the leasehold interest, be adjudged invalid and set aside as fraudulent and preferential, and that the plaintiff shall have judgment in the sum of $:3:32.35 for gains and profits received by the defendant Hobbs on account of the use and possession of the leasehold premises. So ordered, and the clerk will prepare a decree accordingly.

A referee in bankruptcy is not entitled to receive commissions on partial payments made by the estate in bankruptcy on the claims of secured creditors; such payments not being "diVidends," within the meaning of the law, and the referee not performing any of the services required of him by law in the declaration and distribution of dividends. ,Vhere the property of a bankrupt corporation, sold by order of the court, was bought by a lien creditor, who paid part of the price in bonds of the corporation held by him, and the balance in cash, held, that crediting the purchaser with the amount of such bonds was not the declaration and payment of a dividend in his favor, so as to entitle the referee to receive the percentage allowed him by the bankruptcy law "on sums to be paid as dividends and commissions," but was the payment pro rata of a secured claim.

2.

SAME.

In Bankruptcy. Augustus A. Chapin, referee in bankruptcy, presents his petition, showing that on the 18th day of April, 1899, Samuel L. Morris and Charles H. 'Worden, as receivers of this court, sold